Why it's so important to keep the spark alive

James Young
•
28-03-2017

We’re all familiar with the office stereotypes: the pugnacious, overly-enthusiastic, keen-to-impress intern, and the lethargic, long-standing employee who needs five cups of coffee to get started in the morning. Anecdotally, we assume that employee engagement will decrease over time.

In this article, I’ll prove (with data) that this assumption is true. I will also demonstrate that tenure is to blame, and that age has minimal impact on job satisfaction (yes, that’s right – Millennials aren’t the disinterested, unmanageable employees they are often made out to be).

I’ll conclude with a few tips on how you can counteract the demoralising effects of long tenure, and keep your employees motivated and engaged in the long-run.

The problem

The majority of issues that affect engagement are easy to understand. It’s no surprise that an unmanageable workload, uncomfortable office or overbearing manager would impact how you feel about your work. However, such issues don’t explain why it’s senior employees who often suffer from lower levels of job satisfaction.

There have been many attempts to understand what causes employee engagement to change over time. Research has focused on two factors: the age of an employee and their length of tenure, but with conflicting results. The academic community has failed to reach a consensus.

As a leading provider of HR analytics software, we have a uniquely robust dataset available to us. Therefore, we’ve decided to throw our hat into the ring and derive an empirical answer to the problem (once and for all?!).

The data

The Peakon platform measures employee engagement on a scale of 0-10, using the eNPS methodology. Additionally, we monitor 14 unique drivers of engagement (e.g. reward, personal growth, management support) using the same methodology and scale.

On top of this sentiment data, we also standardise demographic information about each employee. This includes employee age and tenure, among other factors like location, department and seniority.

This provides our clients with the ability to dig deep into their data, and identify engagement issues, strengths and areas of concern in any employee group in the business.

In this analysis, we’ll be using an anonymised sample from our database, representative of more than 20,000 employees.

The methodology

The type of data we’re investigating carries some characteristics that we need to take into account.

First of all, age and tenure are co-dependent. As an employee ages their tenure increases, and as an employee gains tenure their age increases. The statistical implication is that we need to estimate the effect of age and tenure at the same time.

Why does this matter? If we imagine that age is the real driving force behind engagement (and tenure has no effect) then we will correctly see a high correlation between age and engagement. However, since age is also correlated with tenure, if we conducted the two analyses separately, we would be led to the false conclusion that tenure and engagement have a high correlation too.

The second characteristic we need to consider is how the age and tenure effects will look. For example, we need to think about whether a change in tenure has the same effect on engagement when it increases from 1 to 2 years, or from 19 to 20 years. This is unlikely. Using regular correlation would assume that the effect is the same regardless.

To counteract this, we bucket employees into groups, such as 0-3 months of tenure, 3-12 months of tenure, etc. We can then estimate the effect of being in a specific age or tenure bracket. The effect of each group is calculated relative to a reference group of our choice. The references we chose were 1-2 years tenure, and 30-35 years of age, since the average engagement levels of these brackets are closest to the average engagement of the whole dataset.

Result one: employee engagement decreases with increasing tenure

The chart below shows the effect of tenure on engagement, while controlling for the influence of employee age and company bias.

We can see that employees with less than a year’s tenure are far more engaged than the 1-2 year reference group. Likewise, employees with tenure greater than 2 years tenure all suffer from significantly lower levels of engagement than their peers.

As expected, the effect of tenure on engagement varies at different tenure lengths. We can see that engagement falls most rapidly in the first yearof employment, before tailing off in later years.

On a technical note, the table below shows the significance of the tenure effects. A significant tenure effect indicates that the variance in engagement is not due to random noise in the data. What we see is that all variables are statistically significant. (The estimated effects are the same as reported in the chart above).

Tenure

Effect compared to 1 – 2 years

Significantly different from 1 – 2 years

< 3 months

0.776

Yes

3 months – 1 year

0.346

Yes

2 – 5 years

-0.164

Yes

5 – 10 years

-0.198

Yes

10 – 15 years

-0.315

Yes

15 – 20 years

-0.329

Yes

> 20 years

-0.331

Yes

Result two: age effects dwarfed by tenure

The table below show the effect of age on engagement.

Age

Effect compared to 30 – 35 years

Significantly different from 30 – 35 years

< 20 years

0.06

No

20 – 25 years

-0.22

Yes

25 – 30 years

-0.17

Yes

35 – 40 years

-0.13

No

40 – 45 years

-0.07

No

> 45 years

-0.02

No

We can see employees in the 20-25 and 25-30 age brackets are significantly less engaged than the 30 – 35 year reference group, and that engagement does not drop significantly beyond this. This suggests that employees currently in their 20s are less engaged than their older peers.

However, the age effects are dwarfed by the effect of tenure. Engagement varies by as much as 1.1 engagement points (on a scale from 0 – 10) based on tenure but only 0.22 engagement points based on age.

What does this mean in the real world?

The strong link between tenure and engagement is encouraging for HR professionals and business leaders. If we can identify what drives high levels of engagement in new hires, then we can attempt to replicate the effects for longer-serving employees as well. Ultimately, this would boost the engagement levels of these individuals, and result in improved productivity and retention for the business.

Since a new hire will no doubt be given the chance to acquire new skills and apply existing experience to new situations, it is reasonable to assume that an employee entering a new position will feel high levels of personal growth.

In fact, rather than assume, we went one step further and adapted our model to show the effect of tenure on Growth driver scores. The graph below echoes the results for engagement, showing that an employee’s sense of personal growth drops significantly as their tenure increases.

« A great way to keep long-serving employees motivated, is to keep their job fresh and exciting, » says Peakon co-founder, Dan Rogers. « Personal growth is not just important for graduates and new starters; every employee needs clear career progression and to be learning new skills, no matter their seniority. »

« We rely on our most established employees to know the business inside out and lead from the front. This can often mean that we neglect to provide them with the support that we expect them to give others. »

« Providing these senior employees with new challenges is vital to their engagement. This could mean supporting them in applying new technologies or approaches to their current role, or allowing them the chance to take a new position elsewhere in the company. Afterall, their expertise in their field and knowledge of the business is likely tranferable and would be highly valued by other departments. »

Any questions? Interested in learning more? Message me through Intercom in the bottom right corner of the page.